Beyond the regular pay package employees receive at the end of a work period, managers can employ extra rewards in a workplace. When such rewards are material, and of value, they are called tangible rewards. The logic behind them is simple. Who doesn’t value recognition, especially when the recognition comes with gifts that could improve comfortability and quality of life?
Tangible rewards are material value given to employees by managers/supervisors as recognition for a job well done. Such rewards are given for meeting goals and targets and may serve as motivation.
Increased loyalty and employee retention rate: the answer to the game is recognition. When employees feel their contributions are recognized, their loyalty to the manager and the organization increases. Consequently, they are less likely to force themselves out of their employment situation.
Increased motivation: Using tangible rewards as incentives motivate employees to put in more effort. This is borne from an understanding that credit would be assigned to who is due.
Increased confidence: in a team-oriented work environment, tangible rewards could inspire confidence in employees. This makes it easier for them to contribute and provide value in the long term.
The major drawback of using tangible rewards in a workplace is the risk of performance starting to hinge on such rewards. In such cases, employees show much-reduced motivation when such rewards are not up for grabs.
Another problem is the potential for favoritism. The bias doesn’t always have to exist; if some employees think it does, then the damage is done. Managers can avoid this by keeping the reward structure consistent and transparent.
Sponsored vacations, etc.
Note: Tangible rewards shouldn’t wholly replace intangible rewards, especially important ones like promotions. This is because while intangible rewards are good for boosting short-term morale, certain intangible rewards are essential for long-term employee satisfaction.